The inquiry related to former AIADMK interim general secretary V.K. Sasikala having bought malls and mills using ₹1,674.50 crore in demonetised currency notes has led to an interesting development, with the Madras High Court observing that such notes cannot be considered legal tender at all.
Justice Anita Sumanth made the observation while dismissing a batch of writ petitions filed by Ms. Sasikala’s alleged benamidars who had challenged the preliminary inquiry initiated against them by the Income Tax Department. The cases were dismissed by way of a common judgment on October 25 last year, but the verdict was made available only now.
Holding that the Department was in possession of sufficient materials to initiate a preliminary inquiry, the judge, however, said most of the arguments raised by the petitioners could be answered only during adjudication to be undertaken by the Department. On the petitioners’ contention that action under the Prohibition of Benami Property Transactions Act, 1988, could be initiated only if the payment was made by way of legal tender, the judge said, “There is no question that currency notes of the value of ₹500 and ₹1,000, once demonetised, do not constitute legal tender.” She further said, “It is a plausible argument to state that ‘consideration’ must comprise legal tender alone” and left the question open for a decision by the Income Tax Department. The judge also ordered the start of adjudication within a month and insisted upon following the principles of natural justice.
The writ petitioners included Ganga Foundations Private Limited, D.V. Balaji and V.J. Dinakaran in connection with the purchase of Spectrum Mall at Perambur in Chennai. The petitioners had claimed they were coerced into selling the property for ₹192.50 crore but were paid only ₹130 crore in demonetised notes on December 16, 2016.
Similarly, Marg Realities Limited (now renamed Digital Accelerator Limited) and its shareholders had approached the court over the alleged purchase of Marg Square, a 2.33 lakh square foot commercial building on Rajiv Gandhi IT Expressway in Chennai. The petitioners claimed that they had agreed to sell only their shares for a consideration of ₹170 crore.
Asserting that the commercial building was never in the radar, the petitioners claimed to have been coerced into receiving a part payment of ₹105 crore in demonetised currency notes for the sale of shares alone. They accused an advocate, named Senthil, who claimed to be representing former Chief Minister Jayalalithaa, then under hospitalisation.
The third set of cases were filed by the owners of Pondicherry Sri Lakshmi Jewellery. These petitioners had volunteered to sell their Ocean Spray resort on East Coast Road for a consideration of ₹168 crore but had reportedly received only ₹135.25 crore in demonetised currency notes.
